Qualcomm Out-rightly Rejects Broadcom’s $130 Bn Proposal

Qualcomm, the largest chip maker for mobile devices, has rejected the $130 billion acquisition proposal of Broadcom saying no one is better than it to lead the mobile devices ecosystem. It was a unanimous decision by the board of directors to reject Broadcom’s proposal.

Broadcom, the US-based semiconductor firm, last week, had shown interest to buy the Snapdragon maker at a value of $70 per share in the acquisition proposal that would consist of $60 in cash and $10 per share in Broadcom shares.

“It is the Board’s unanimous belief that Broadcom’s proposal significantly undervalues Qualcomm relative to the Company’s leadership position in mobile technology and our future growth prospects,” said Paul Jacobs, Executive Chairman and Chairman of the Board of Qualcomm Incorporated.

“No company is better positioned in mobile, IoT, automotive, edge computing and networking within the semiconductor industry. We are confident in our ability to create significant additional value for our stockholders as we continue our growth in these attractive segments and lead the transition to 5G,” said Steve Mollenkopf, Chief Executive Officer of Qualcomm.

“The Board and Management are singularly focused on driving value for Qualcomm’s shareholders. After a comprehensive review, conducted in consultation with our financial and legal advisors, the Board has concluded that Broadcom’s proposal dramatically undervalues Qualcomm and comes with significant regulatory uncertainty. We are highly confident that the strategy Steve and his team are executing on provides far superior value to Qualcomm shareholders than the proposed offer,” said Tom Horton, Presiding Director for the San Diego based chip maker.

The Broadcom’s valuation was 28% higher over the closing price of Qualcomm common stock on November 2, 2017 and 33% higher than its average valuation over the preceding one month period.

The combined revenue of the three firms in question – Qualcomm, Broadcom and NXP – is expected to touch $51 billion in FY 2017 with EBIDTA of aroud $23 billion, forecasts the semiconductor fiem, justifying its proposal. It also said that Silver Lake Partners is interested in putting in $5 billion to support the transaction.

Broadcom had also said this proposal of buying Qualcomm would stay put irrespective of the outcome of the latter’s pending acquisition of NXP.


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